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Monthly Archives: March 2015

≈ Comments Off on Filling Demand-Supply Gap in Housing with Low-Cost Tech

Scientists have been asked to come up with low cost technologies to fill the demand-supply gap in the housing sector, in order to meet the Governments target goal of housing for all by 2022.

CSIR-Structural Engineering Research Centre (CSIR-SERC), a Laboratory of the Council for Scientific and Industrial Research (CSIR) feels that more than ever before we need low-cost technologies for rapidly filling up the demand-supply deficit.

For the first time a prime minister has set a deadline for providing every family a roof over its head. Construction technologies, high-science products and specialized services developed by SERC would form an essential component for the prime minister’s (Narendra Modi) project. The community of scientists were urged to ensure affordability as well as safety.

The CSIR-SERC over the past 50 years has earned many laurels, especially for its role in the 2007 achievement of re-engineering the navigational plan of the Pamban Railway Bridge over the Palk Strait which connects Rameshwaram to mainland India.

The scientists were asked to think out-of-the-box and pursue new research areas which could meet the country’s needs as well as put the nation ahead in select technology domains related to the activities of the institute. The prime minister has given a call for ‘Make in India’.

We need to generate millions of jobs within a couple of years because this country has a youth bulge. Seamless partnership will help develop products and technologies for the benefit of the common man.

The entrepreneurs should focus on using renewable and green materials or Indian-origin, materials including, based on nano-technology, which have minimum carbon footprint as well which are low-cost and sustainable.

The Government will bring some more changes in Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. There would be about none amendments in the bill, which will replace the old one that lapses on April 5.

One of the clauses would be a consent clause strictly for landowners. Another amendment is limiting land to be acquired for industrial corridors without consent to one kilometer on either side of highways and railway lines. It also guarantees a job to a member of the affected families.

The 2013 Act hindered acquiring of even a hectare for small development projects like schools, hospitals and irrigation projects. Lack of development hampered job creation and farmers were forced to commit suicide. The amendments in the land act is to be made more farmer -friendly.

Tamil Nadu Chief Minister O Panneerselvam told the Assembly that his party had supported the Narendra Modi government’s land Bill only after the amendments suggested by it against land acquisition for private hospitals and colleges were accepted by the Union government. The act 2013 is expected to bring development to villages.

The Bill that was passed by the Lok Sabha, however, will be null and void once the new ordinance is comes into force. The government on Saturday called an end to its ongoing session to facilitate issuing of the ordinance.

The Chennai Corporation collects 1,143 tonnes of construction and demolition (C&D) waste a day and charges Rs. 532 a tonne for its removal from the site. How is this being managed? Currently, at the national level, there are no official estimates about the quantity of waste generated. In 2014, responding to a question in Parliament, the Ministry of Urban Development said it had no records.

The Centre for Science and Environment (CSE) estimated that India generated around 530 million tonnes (MT) of C&D waste in 2013. In a year, of 48 MT of solid waste generated in India, C&D waste is 25 per cent. Not even half the waste is recycled. Apart from environmental degradation, this will lead to an increase in transportation and disposal costs, and a drastic shortage in dumping sites.

In India, minimising on-site waste is not a priority and hence leads to enormous quantities generated. Our rivers are destroyed by extensive sand mining that goes into making cement and mortar. This material is wasted and dumped back into these denuded rivers and wetlands, further degrading them.

Analysis shows that reuse of waste in low-budget houses can reduce costs by 30 to 35 per cent without compromising on the durability of the structure. Materials and components from demolished buildings are being reused for new construction as well as renovation projects, especially by low-income communities in developing countries.

Recycling will cut costs of producing new raw materials and reduce the use of landfills. Scrap such as gunny bags, paint boxes and steel scrap are being reused. Demolition waste such as concrete, timber, tiles and marble are used for curing and also for low-cost projects. Plastic, rubble can be used for levelling, and larger pieces can fill low-lying areas. Fine material such as sand can be used as cover over a landfill.

We need a C&D waste management strategy, as in other countries. Singapore reuses 98 per cent of its C&D waste, Hong Kong more than 70 per cent and in 2000, Japan used 95 per cent of its concrete waste in roadbeds. Most material is designed for multiple uses, but is underutilised. Contracts must make it mandatory for developers and vendors to reuse material and also provide them with incentives.

Clearly, the onus is on developers, contractors and development authorities to implement and promote sustainable construction methods that reduce and reuse waste.

The government is going to choose 100 urban centres for its ‘smart city’ project through a competition.

The State governments will participate in a ‘city challenge to have their cities among the 100 to be developed as smart cities. The smart city project, announced in July last year, is being coordinated by the Union urban development ministry. After the states have nominated their cities, a Central expert panel will make the final selection on the basis of certain criteria, such as the cities’ size, population, infrastructure level and upgrade potential. The first round of selection will include about 20 cities and the then the remaining 80 cities will come in phases.

Though many countries have expressed interest in the project and entered into partnership pacts, agreements are to be signed only after selection of the cities to be developed. Government officials, however, indicate some target like Ajmer, Allahabad, Visakhapatnam and Varanasi are expected to make the final list.

The smart city project’s take-off has been slow, that even the concept note is still in the draft stage. The international attention it has received so far has been significant. The US, Japan, China, Germany, Spain, France, the Netherlands and Singapore have already expressed interest in the project. While these countries are to bring technical knowhow and expertise to the table, the project’s financial model and types of smart cities are still in the works.

The government was currently working on the concession agreements and standards for the project. The Foundation for Futuristic cities (FFC)is a knowledge partner for the project. The public-private partnership (PPP) structure, earlier recommended for smart cities, was now being tweaked to make funding more flexible.

The annual project cost, initially estimated at Rs 35,000 crore, is also being reworked. The annual Budget for 2014-15 had allocated Rs 7,016 crore for the project but only Rs 924 crore has been spent so far. The allocation for 2015-16 has been brought down to Rs 143 crore. The new funding format is believed to have a higher share of states and industry in the smart city project’s overall investment.

The nature of the project will determine the cost. For example a new project will cost more when compared to redevelopment and retrofitting. And there will be some greenfield ventures as well.

Greenfield projects and brownfield (redevelopment) projects may be time consuming and problematic. The question is whether these projects are to be elitist or inclusive.

There also is a proposal to link many signature projects like smart cities, Swachh Bharat and Digital India. Smart cities are broadly defined as urban spaces that are technologically integrated, well-planned and environment-friendly.

Instructions has been issued to public sector banks by the Department of Financial services to target and encourage clients seeking home loans and home improvement loans to install rooftop solar photo voltaic plants and include their cost in the loan proposal. The Union Ministry for New and Renewable Energy is in the process of implementing a grid-connected rooftop and small solar power plants programme to encourage rooftop systems for power generation.

The Ministry has also announced that the subsidy on rooftop solar power generation system was being reduced to 15 per cent from the previous 30 per cent in keeping with the falling price of solar panels. This decision is partly due to a paucity of subsidy funds. However, other provisions like concessional import duty, excise duty exemption, accelerated depreciation, and tax holiday for setting up grid-linked solar power facility would continue.

The Ministry has also come out with a list of banks and financial institutions that have committed as much as Rs. 3,52,640 crore for generating 70,505 MW of green energy up to 2021-22. Among the banks are State Bank of India (SBI), which has committed Rs. 75,000 crore for producing 15,000 MW of green power, ICICI Bank that has committed Rs. 37,500 crore for 7,500 MW, and State Bank of Travancore (SBT) that has committed Rs. 1,250 crore for 250 MW. These commitments were made during the recent RE-INVEST 2015, a renewable energy global investor meet and expo in Delhi.

While most private equity (PE) funds in real estate are struggling with exits, ASK Groupseems to be bucking the trend.

ASK Property Investment Advisors, the realty fund management arm of ASK Group, had invested Rs 30 crore in a project of Amit Enterprises at Baner in Pune. And, it successfully exited with 2.5 times returns at Rs 75 crore. Similarly, it made 1.8 times returns in Paranjape’s premium project Skyone at Model Colony in Pune, where it had invested Rs 40 crore.

Explaining the importance of location, they said that both the projects were at excellent locations. While Model Colony is a city centre and commands prices of Rs 14,000-17,000 a sq ft, Baner is fast developing.

Thanks to these exits, ASK returned Rs 350 crore to its investors, which is more than the Rs 317 crore raised. ASK’s strategy of sticking to top six cities (Mumbai metropolitan region, Delhi national capital region, Bengaluru, Chennai, Pune and Hyderabad), investing only in asset-level special purpose vehicles and in residential projects in city and suburban limits yielded the results.

Fund managers are exiting one in 10 projects. Basically, PEs are asking their investee companies to borrow at 17-18 per cent and replace them with debt.
Many PE fund managers have exited with loss. For instance, IL&FS exited some of its investments in The Phoenix Mills projects at a loss, according to reports.

A lot of capital went to developers with bad positioning and over-priced projects. If you have invested with B and C players, you are stuck. Similarly, if you are invested with over-leveraged developers in Mumbai who are battling slowdown, you are stuck.

Exits are becoming tougher as sales are not happening. Service tax and statutory levies have gone up… Bank dues have to be paid. Hence net surplus is less.

The tax department would now collect from foreign portfolio investors a Minimum Alternate Tax and this was clarified in the Union Budget 2015-16. The Budget had clarified that the tax would not be charged but the tax department have proceeded charging MAT for year 2011-12, since it is not applicable to past years and only to prospective years.

The budget said that MAT would not apply to capital gains. The stake holders feel that this has a negative impact for FPIs.

This seems to be on the understanding that the Budget clarification only pertains to 2015-16 and future years; any claim on past years will be valid. There has been no specific direction from the Central Board of Direct Taxes on whether income for the past years should also be exempt from MAT, based on the Budget proposals. So, tax authorities are planning to reinitiate their demand for MAT, as the deadline for completing assessments for 2011-12 is March 31.

This will also open the door to taxation for past years, with tax authorities within their rights to go back as many as seven years. Investors can appeal against the demands to either the commissioner of income tax (appeals) or the Dispute Resolution Panel.

MAT was introduced after it was found many companies paid little by way of taxes, on account of various exemptions.

This was despite the companies making large profits. Tax authorities are relying on a ruling in the case of Castleton Investments, according to which MAT is applicable to foreign entities. However, consultants say there isn’t a strong basis for this, especially as the Delhi tribunal, in September 2014, had ruled MAT was only applicable to companies that maintained books of accounts under Indian law; foreign investors don’t do so.

Before the Budget, they were asked to furnish financial statements under Indian law.

The Budget clarification said MAT wouldn’t be applicable to capital gains. Experts have said this leaves open tax demands on interest income and leads to ambiguity on whether foreign investors would have to file financial statements under Indian law, which they earlier did not.

Experts say, there is a push now on MAT because the assessment is time-bound for two years, in the normal course of things. This means for assessment year 2012-13, the department must make demands by this month; otherwise, they have to re-open old assessments.

That, however, isn’t also out of the question. Re-openings are allowed for seven years if there is new information available or if something hasn’t been assessed.

Some say this could also apply to foreign direct investment, adding there has been doubt on whether treaty rates would be applicable. Through some treaties, such as the one with Mauritius, FPIs pay zero tax. Levying at least 20 per cent MAT will make lower taxes under such treaties inapplicable.

MAT is only a computation mechanism; it does not determine chargeability. Gains which have already been exempt due to treaty benefits should not be subject to a levy of MAT. If held otherwise by the tax department, foreign investors will have a good case in appeals. Else, capital gains tax exemption from jurisdictions such as Mauritius and Singapore will stand negated. International treaties are sacrosanct. It is unlikely that an Act that indirectly denies treaty benefits will be upheld.

So far this financial year, foreign investors have been net buyers by Rs 1.1 lakh crore in the equity market and Rs 1.65 lakh crore in the debt market. They held assets under custody worth Rs.24.56 lakh crore in debt and equity securities according to the latest regulatory data (February).

The Modi government has identified housing, infrastructure and urbanisation initiatives as the key to pushing the economy. The government has invested its own capital for these reform activities, but Global rating agency Moody’s feel that securitization can resolve funding issues in these sectors that have longer gestation periods.

The securitization activity has been lacking clarity in regulation and taxation fronts. But beyond this it can provide funds for real estate developers, sponsors, loan providers alleviating pressure on public finances and banking system.

Issues around regulation and taxation fronts directly impact the motivation levels of the originators and investors. Emergence of a broader set of investors is important for the development of the securitization market in the country, which will in turn fund the economy.

Buying homes in distant shores seem to be trend now and the frequent advertisements about properties available in Dubai, Malaysia, Mauritius etc are pointers to the options available.Most of these countries offer citizenship to property buyers.The quality of developments across many of these locations is of a very high order.

In India, if you aren’t from Uttarakhand, you can’t buy property in the State even if you are an Indian citizen. In states like Himachal Pradesh, which has relaxed its earlier law, one can not buy agricultural land. Goa is considering restricting land and property purchases by foreigners and outsiders to ‘protect the interests’ of natives, for whom realty prices are becoming unaffordable.

However, several overseas destinations now allow foreigners to invest in immovable assets. The U.S. and the U.K. has no restrictions on foreign investors buying property and some countries even throw in free residency for life or a specified number of years.

The choice of your new home destination has to be determined by several factors, the cost of property being just one of them. Once you have decided on your affordable choices, the laws of the land (ease of sale and exit, residency rules), the climate, language, social life and amenities, key infrastructure (power, water, transport, healthcare, communications), cost of living and safety are some primary factors to consider.

If you don’t know the native language, the going can be tough in small towns and semi-urban areas. Also, as far as regulatory processes go, land and property records and related documentation are all in the native language, so unless you can read the language you won’t know whether the seller’s name is correct or if the documentation is in order. To get around these hurdles, we usually engage the services of an advocate and/or realty broker.

So if you have the money and are willing to spend it, why not the Bahamas!

Every square foot of built up space has to project the best of design, ideas and decisions and if that is what energy-efficient architecture is looking to achieve, we have the relevant technology and materials to meet that end.

The topic is about basements and how, in India, basements are used to park cars. Basement car parks take up more space than what you would ever imagine. The ramp down to a 5 ft. lower basement needs to be around 25 to 30 ft. long for a comfortable drive, while the car itself will not be longer than 16 ft. long. So, just imagine the total length of 40 to 45 ft. we spare to park one car, which on normal ground level would not demand more than 20 ft.

The ramp space cannot be used for anything else but driving down, unlike the flat part of the site. On ground, if the car were to be kept out temporarily, the space could also be used as a guest space during events, buffet lunch area, kids’ play area or shaded area for plants. Steep slopes to the basement would incur extra cost of executing the ramp, making it skid proof and building up the side retaining walls, and also reduces the multi-functionality of the site.

This analysis is not to negate the idea of a basement, but to discourage car parking in the basement. If we analyse expenses, advantages and disadvantages of basement car parking, we see more disadvantages than advantages. Equally well, this analysis is to suggest a methodology to be adapted when we design green buildings, where we may weigh the options for their real benefits and get an efficient building.

Basements can be put to many uses, including converting them into usable living spaces to cope with changing household set ups without needing to move. Comfortable living spaces, media rooms, game rooms and family rooms are the popular choices that subterranean spaces are converted into.

But some spaces are just not large enough to convert into living spaces, and then those are converted into utility area. Any appliances you install in your basement will free up space in your kitchen.

Adding lots of recessed lighting and making the space easy to maintain would make it look more spacious and well designed, adding value to your property.